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An Investor Quick Overview Of How Karex Bhd Makes Its Money

Karex Bhd (KLSE: KAREX) is a Malaysian-based producer of condoms, catheters, probe covers, lubricating jelly and more.

As the legendary investor Warren Buffet once said, we should invest in 1) businesses that we can understand 2) businesses with competitive durable advantage 3) businesses with honest and capable management and 4) at a reasonable price.

From the above, we can see the importance of understanding a company prior to committing our capital.

In this article, we will try to understand one aspect of the company – how does it make its cash.

Revenue analysis:

Source: Karex’s 2016 Annual Report

From the above, we can see that Karex makes its money in three main products, namely, condoms, catheters and probe covers and lubricating jelly.

These products are mainly sold into three different markets as illustrated below.

Source: Karex’s 2016 Annual Report

The commercial market is where Karex manufactures condoms for brand owners such as Ansell (Lifestyle), Reckitt Benckiser (Durex), Line One Laboratories (Trustex) and others.

For the tender market, Karex tenders to institutional buyers such as NGOs and government agencies to manufacture condoms.

Lastly, the OBM market is where Karex manufactures condoms under its own brands such as Carex and One.

Conclusion:

Overall, we see that there are a number of moving parts here.

But by breaking down and understanding the different parts separately, it should be easier for investors to understand the business as a whole.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.